Strong Start to 2017, Increasing Core Revenue Growth
Guidance
Highlights:
- GAAP net income of $168 million, or
$0.52 per share
- Non-GAAP net income of $172 million, or
$0.53 per share(1) versus midpoint guidance of $0.49 per share
- Revenue of $1.07 billion, representing
growth of 3.8 percent (core revenue growth of 4.8 percent(2) versus
midpoint guidance of 2.2 percent)
- Second-quarter fiscal year 2017 revenue
guidance of $1.04 billion to $1.06 billion, and non-GAAP earnings
guidance of $0.47 to $0.49 per share(3)
- Increasing fiscal year 2017 core
revenue growth guidance to 4.5%(2). Revenue guidance of $4.33
billion to $4.35 billion. Reaffirming non-GAAP earnings guidance of
$2.10 to $2.16 per share(3), despite negative 3 cent impact from
currency and acquisition.
Agilent Technologies, Inc. (NYSE: A) today reported revenue of
$1.07 billion, up 3.8 percent year over year (up 4.8 percent on a
core basis(2)) for the first fiscal quarter ended Jan. 31,
2017.
First-quarter GAAP net income was $168 million, or $0.52 per
share. Last year’s first-quarter GAAP net income was $121 million,
or $0.36 per share.
During the first quarter, Agilent had intangible amortization of
$31 million, acquisition and integration costs of $16 million,
transformation costs of $2 million and $2 million of other costs.
Excluding these items, a pension settlement gain of $32 million and
a tax benefit of $15 million, Agilent reported first-quarter
non-GAAP net income of $172 million, or $0.53 per share(1).
“The Agilent team started 2017 with another strong quarter,
despite currency headwinds,” said Mike McMullen, Agilent president
and CEO. “Our first-quarter revenue and non-GAAP earnings per
share(1) exceeded the high end of November’s guidance.
“Our strong revenue results were driven by a return to growth in
our Chemical & Energy business and higher-than-expected China
growth. Overall, we are confident in the company’s prospects, and
we are raising our full-year core revenue growth expectations,”
McMullen added.
First-quarter revenue of $540 million from Agilent’s Life
Sciences and Applied Markets Group (LSAG) grew 3 percent year over
year (up 4 percent on a core basis(2)), with strength in pharma,
food, chemical and energy. LSAG’s Q1 operating margin for the
quarter was 23.4 percent.
First-quarter revenue of $363 million from the Agilent CrossLab
Group (ACG) grew 6 percent year over year (up 7 percent on a core
basis(2)). Both services and consumables experienced healthy growth
across all geographies. ACG’s operating margin for the quarter was
20.3 percent.
First-quarter revenue of $164 million from Agilent’s Diagnostics
and Genomics Group (DGG) grew 4 percent year over year (also up 4
percent on a core basis(2)), led by strength in Dako-branded
products and nucleic acid solutions. DGG’s operating margin for the
quarter was 14.3 percent.
Agilent expects second-quarter 2017 revenue in the range of
$1.04 billion to $1.06 billion. Second-quarter non-GAAP earnings
are expected to be in the range of $0.47 to $0.49 per share(3).
For fiscal year 2017, Agilent expects revenue of $4.33 billion
to $4.35 billion and non-GAAP earnings of $2.10 to $2.16 per
share(3). The guidance is based on Jan. 31, 2017 currency exchange
rates.
About Agilent Technologies
Agilent Technologies, Inc. (NYSE: A), a global leader in life
sciences, diagnostics and applied chemical markets, is the premier
laboratory partner for a better world. Agilent works with customers
in more than 100 countries, providing instruments, software,
services and consumables for the entire laboratory workflow.
Agilent generated revenue of $4.20 billion in fiscal 2016. The
company employs about 12,500 people worldwide. Information about
Agilent is available at www.agilent.com.
Agilent’s management will present more details about its
first-quarter FY2017 financial results on a conference call with
investors today at 1:30 p.m. PT. This event will be webcast live in
listen-only mode. Listeners may log on at www.investor.agilent.com
and select “Q1 2017 Agilent Technologies Inc. Earnings Conference
Call” in the “News & Events Calendar of Events” section. The
webcast will remain available on the company’s website for 90
days.
Additional information regarding financial results can be found
at www.investor.agilent.com by selecting “Financial Results” in the
“Financial Information” section.
A telephone replay of the conference call will be available at
approximately 4:30 p.m. PST today through Feb. 21 by dialing +1
855-859-2056 (or +1 404-537-3406 from outside the United States)
and entering pass code 56828410.
Forward-Looking Statements
This news release contains forward-looking statements as defined
in the Securities Exchange Act of 1934 and is subject to the safe
harbors created therein. The forward-looking statements contained
herein include, but are not limited to, information regarding
Agilent’s future revenue, earnings and profitability; planned new
products; market trends; the future demand for the company’s
products and services; customer expectations; and revenue and
non-GAAP earnings guidance for the second quarter and full fiscal
year 2017. These forward-looking statements involve risks and
uncertainties that could cause Agilent’s results to differ
materially from management’s current expectations. Such risks and
uncertainties include, but are not limited to, unforeseen changes
in the strength of our customers’ businesses; unforeseen changes in
the demand for current and new products, technologies, and
services; unforeseen changes in the currency markets; customer
purchasing decisions and timing, and the risk that we are not able
to realize the savings expected from integration and restructuring
activities.
In addition, other risks that Agilent faces in running its
operations include the ability to execute successfully through
business cycles; the ability to meet and achieve the benefits of
its cost-reduction goals and otherwise successfully adapt its cost
structures to continuing changes in business conditions; ongoing
competitive, pricing and gross-margin pressures; the risk that our
cost-cutting initiatives will impair our ability to develop
products and remain competitive and to operate effectively; the
impact of geopolitical uncertainties and global economic conditions
on our operations, our markets and our ability to conduct business;
the ability to improve asset performance to adapt to changes in
demand; the ability of our supply chain to adapt to changes in
demand; the ability to successfully introduce new products at the
right time, price and mix; the ability of Agilent to successfully
integrate recent acquisitions; the ability of Agilent to
successfully comply with certain complex regulations; and other
risks detailed in Agilent’s filings with the Securities and
Exchange Commission, including our annual report on form 10-K for
the year ended Oct. 31, 2016. Forward-looking statements are based
on the beliefs and assumptions of Agilent’s management and on
currently available information. Agilent undertakes no
responsibility to publicly update or revise any forward-looking
statement.
# # #
(1) Non-GAAP net income and non-GAAP earnings
per share primarily excludes the impacts of acquisition and
integration costs, transformation initiatives, business exit and
divestiture costs, non-cash intangibles amortization, and pension
settlement and curtailment gains. We also exclude any tax benefits
that are not directly related to ongoing operations and which are
either isolated or is not expected to occur again with any
regularity or predictability. A reconciliation between non-GAAP net
income and GAAP net income is set forth on page 5 of the attached
tables along with additional information regarding the use of this
non-GAAP measure.
(2) Core revenue growth excludes the impact
of currency, the NMR business and acquisitions and divestitures
within the past 12 months. Core revenue is a non-GAAP measure. A
reconciliation between Q1 FY17 GAAP revenue and core revenue is set
forth on page 7 of the attached tables along with additional
information regarding the use of this non-GAAP measure. Core
revenue growth as projected for full fiscal year 2017 excludes the
impact of currency, the NMR business and acquisitions and
divestitures within the past 12 months. Most of these exclude
amounts that pertain to events that have not yet occurred and are
not currently possible to estimate with a reasonable degree of
accuracy and could differ materially. Therefore, no reconciliation
to GAAP amounts has been provided.
(3) Non-GAAP earnings per share as projected
for Q2 FY17 and full fiscal year 2017 excludes primarily the future
impact of acquisition and integration costs, pension settlement
gain, and non-cash intangibles amortization. We also exclude any
tax benefits that are not directly related to ongoing operations
and which are either isolated or is not expected to occur again
with any regularity or predictability. Most of these excluded
amounts that pertain to events that have not yet occurred and are
not currently possible to estimate with a reasonable degree of
accuracy and could differ materially. Therefore, no reconciliation
to GAAP amounts has been provided. Future amortization of
intangibles is expected to be approximately $32 million per
quarter.
NOTE TO EDITORS: Further technology, corporate citizenship and
executive news is available on the Agilent news site at
www.agilent.com/go/news.
AGILENT TECHNOLOGIES, INC.CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS(In millions, except per share
amounts)(Unaudited)PRELIMINARY
Three Months EndedJanuary 31, Percent
2017 2016 Inc/(Dec) Net revenue $ 1,067
$ 1,028 4 % Costs and expenses: Cost of products and
services 493 491 — Research and development 79 78 1 % Selling,
general and administrative 289 304 (5
%) Total costs and expenses 861 873 (1
%) Income from operations 206 155 33 % Interest
income 4 2 100 % Interest expense (20 ) (18 ) 11 % Other income
(expense), net 3 3 — Income
before taxes 193 142 36 % Provision for income taxes 25 21
19 % Net income $ 168 $ 121 39 %
Net income per share: Basic $ 0.52 $ 0.37 Diluted $
0.52 $ 0.36 Weighted average shares used in computing net
income per share: Basic 322 329 Diluted 326 332 Cash
dividends declared per common share $ 0.132 $ 0.115 The
preliminary income statement is estimated based on our current
information. Page 1
AGILENT TECHNOLOGIES,
INC.CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME(In millions)(Unaudited)PRELIMINARY
Three Months EndedJanuary 31,
2017 2016 Net income $ 168 $ 121 Other
comprehensive income (loss), net of tax: Unrealized gain on
derivative instruments 1 3 Amounts reclassified into earnings
related to derivative instruments — (1 ) Foreign currency
translation (3 ) (56 ) Net defined benefit pension cost and post
retirement plan costs: Change in actuarial net loss 17 15 Change in
net prior service benefit (1 ) (8 ) Other
comprehensive income (loss) 14 (47 )
Total comprehensive income $ 182 $ 74 The
preliminary statement of comprehensive income is estimated based on
our current information. Page 2
AGILENT
TECHNOLOGIES, INC.CONDENSED CONSOLIDATED BALANCE
SHEET(In millions, except par value and share
amounts)(Unaudited)PRELIMINARY
January 31,2017 October 31,2016
(a) ASSETS Current assets: Cash and cash equivalents
$ 2,241 $ 2,289 Accounts receivable, net 653 631 Inventory 551 533
Other current assets 190 182 Total
current assets 3,635 3,635 Property, plant and equipment,
net 653 639 Goodwill 2,563 2,517 Other intangible assets, net 411
408 Long-term investments 133 135 Other assets 477
460 Total assets $ 7,872 $ 7,794
LIABILITIES AND EQUITY Current liabilities: Accounts payable
$ 268 $ 257 Employee compensation and benefits 189 235 Deferred
revenue 299 269 Short-term debt 189 — Other accrued liabilities
143 184 Total current liabilities 1,088
945 Long-term debt 1,803 1,904 Retirement and
post-retirement benefits 350 360 Other long-term liabilities
331 339 Total liabilities 3,572
3,548 Total Equity: Stockholders' equity:
Preferred stock; $0.01 par value; 125
million shares authorized; none issued and outstanding
— —
Common stock; $0.01 par value, 2 billion
shares authorized; 322 million shares at January 31, 2017 and 614
million shares at October 31, 2016, issued
3 6
Treasury stock at cost; zero shares at
January 31, 2017 and 290 million shares at October 31, 2016
— (10,508 ) Additional paid-in-capital 5,236 9,159 Retained
earnings (accumulated deficit) (453 ) 6,089 Accumulated other
comprehensive loss (489 ) (503 ) Total stockholders'
equity 4,297 4,243 Non-controlling interest 3
3 Total equity 4,300 4,246 Total
liabilities and equity $ 7,872 $ 7,794 (a)
Includes the impact of the adoption of ASU 2015-15. The
preliminary balance sheet is estimated based on our current
information. Page 3
AGILENT TECHNOLOGIES,
INC.CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS(In
millions)(Unaudited)PRELIMINARY
Three MonthsEndedJanuary 31,2017 Cash
flows from operating activities: Net income $ 168
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: Depreciation and amortization 55
Share-based compensation 20 Excess and obsolete inventory related
charges 7 Other non-cash expenses, net 2 Changes in assets and
liabilities: Accounts receivable (31 ) Inventory (26 ) Accounts
payable 9 Employee compensation and benefits (43 ) Other assets and
liabilities (45 ) Net cash provided by operating activities
(a) 116 Cash flows from investing activities: Investments in
property, plant and equipment (32 ) Proceeds from divestitures 1
Acquisition of businesses and intangible assets, net of cash
acquired (70 ) Net cash used in investing activities (101 )
Cash flows from financing activities: Issuance of common
stock under employee stock plans 18 Payment of taxes related to net
share settlement of equity awards (12 ) Payment of dividends (42 )
Proceeds from revolving credit facility 131 Repayment of revolving
credit facility (42 ) Treasury stock repurchases (111 ) Net
cash used in financing activities (58 ) Effect of exchange
rate movements (5 ) Net decrease in cash and cash
equivalents (48 ) Cash and cash equivalents at beginning of
period 2,289 Cash and cash equivalents at end
of period $ 2,241 (a) Cash payments included in
operating activities: Severance payments 1 Income tax payments, net
27 Interest payments 29 The preliminary cash flow is
estimated based on our current information. Page 4
AGILENT TECHNOLOGIES, INC.NON-GAAP NET INCOME AND
DILUTED EPS RECONCILIATIONS(In millions, except per share
amounts)(Unaudited)PRELIMINARY
Three Months EndedJanuary 31,
2017
DilutedEPS
2016
DilutedEPS
GAAP Net income $ 168 $ 0.52 $ 121 0.36 Non-GAAP
adjustments: Intangible amortization 31 0.10 43 0.13 Business exit
and divestiture costs — — 4 0.01 Transformational initiatives 2
0.01 11 0.03 Acquisition and integration costs 16 0.05 5 0.02
Pension curtailment gain — — (16 ) (0.05 ) Pension settlement gain
(32 ) (0.11 ) — — Other 2 0.01 2 0.01 Adjustment for taxes (a)
(15 ) (0.05 ) (17 ) (0.05
) Non-GAAP Net income $ 172 $ 0.53 $ 153
$ 0.46 (a) The adjustment for taxes
excludes tax benefits that management believes are not directly
related to on-going operations and which are either isolated or
cannot be expected to occur again with any regularity or
predictability. For the three months ended January 31, 2017 and
2016, management uses a non-GAAP effective tax rate of 19.0% and
20.0%, respectively. We provide non-GAAP net income and
non-GAAP net income per share amounts in order to provide
meaningful supplemental information regarding our operational
performance and our prospects for the future. These supplemental
measures exclude, among other things, charges related to
amortization of intangibles, business exit and divestiture costs,
transformational initiatives, acquisition and integration costs,
pension curtailment gain and pension settlement gain.
Business
exit and divestiture costs include costs associated with the
exit of the NMR business and the divestiture of the XRD business.
Transformational initiatives include expenses associated
with targeted cost reduction activities such as manufacturing
transfers, small site consolidations, reorganizations, insourcing
or outsourcing of activities. Such costs may include move and
relocation costs, one-time termination benefits and other one-time
reorganization costs.
Acquisition and Integration costs
include all incremental expenses incurred to effect a business
combination. Such acquisition costs may include advisory, legal,
accounting, valuation, and other professional or consulting fees.
Such integration costs may include expenses directly related to
integration of business and facility operations, the transfer of
assets and intellectual property, information technology systems
and infrastructure and other employee-related costs.
Pension
curtailment gain resulted from certain retirement plans benefit
reductions.
Pension settlement gain resulted from transfer
of the substitutional portion of our Japanese pension plan to the
government.
Other includes certain legal costs and
settlements in addition to other miscellaneous adjustments.
Our management uses non-GAAP measures to evaluate the performance
of our core businesses, to estimate future core performance and to
compensate employees. Since management finds this measure to be
useful, we believe that our investors benefit from seeing our
results “through the eyes” of management in addition to seeing our
GAAP results. This information facilitates our management’s
internal comparisons to our historical operating results as well as
to the operating results of our competitors. Our management
recognizes that items such as amortization of intangibles can have
a material impact on our cash flows and/or our net income. Our GAAP
financial statements including our statement of cash flows portray
those effects. Although we believe it is useful for investors to
see core performance free of special items, investors should
understand that the excluded items are actual expenses that may
impact the cash available to us for other uses. To gain a complete
picture of all effects on the company’s profit and loss from any
and all events, management does (and investors should) rely upon
the GAAP income statement. The non-GAAP numbers focus instead upon
the core business of the company, which is only a subset, albeit a
critical one, of the company’s performance. Readers are
reminded that non-GAAP numbers are merely a supplement to, and not
a replacement for, GAAP financial measures. They should be read in
conjunction with the GAAP financial measures. It should be noted as
well that our non-GAAP information may be different from the
non-GAAP information provided by other companies. The
preliminary non-GAAP net income and diluted EPS reconciliation is
estimated based on our current information. Page 5
AGILENT TECHNOLOGIES, INC.SEGMENT
INFORMATION(In millions, except where
noted)(Unaudited)PRELIMINARY
Life Sciences and Applied Markets Group Q1'17
Q1'16 Revenue $ 540 $ 526 Gross Margin, % 59.6 % 58.7 %
Income from Operations $ 126 $ 114 Operating margin, % 23.4 % 21.7
%
Diagnostics and Genomics Group Q1'17
Q1'16 Revenue $ 164 $ 158 Gross Margin, % 54.8 % 52.7 %
Income from Operations $ 23 $ 15 Operating margin, % 14.3 % 9.6 %
Agilent CrossLab Group Q1'17
Q1'16 Revenue $ 363 $ 344 Gross Margin, % 48.5 % 50.1 %
Income from Operations $ 74 $ 76 Operating margin, % 20.3 % 22.1 %
Income from operations reflect the results of our reportable
segments under Agilent's management reporting system which are not
necessarily in conformity with GAAP financial measures. Income from
operations of our reporting segments exclude, among other things,
charges related to amortization of intangibles, business exit and
divestiture costs, transformational initiatives, acquisition and
integration costs, pension curtailment gain and pension settlement
gain. Readers are reminded that non-GAAP numbers are merely
a supplement to, and not a replacement for, GAAP financial
measures. They should be read in conjunction with the GAAP
financial measures. It should be noted as well that our non-GAAP
information may be different from the non-GAAP information provided
by other companies. The preliminary segment information is
estimated based on our current information. Page 6
AGILENT TECHNOLOGIES, INC.RECONCILIATIONS OF
REVENUE BY SEGMENT EXCLUDING THE NMR BUSINESS,ACQUISITIONS,
DIVESTITURES AND THE IMPACT OF CURRENCY ADJUSTMENTS
(CORE)(in millions)(Unaudited)PRELIMINARY
Year-over-Year
GAAP
GAAP Revenue by
Segment
Q1'17 Q1'16 Year-over-Year%
Change Life Sciences and Applied Markets Group $ 540 $
526 3 % Diagnostics and Genomics Group 164 158 4 %
Agilent CrossLab Group 363 344 6 % Agilent $
1,067 $ 1,028
Non-GAAP
CurrencyAdjustments
Currency-Adjusted (a)
Non GAAP Revenue
by Segment
Q1'17 Q1'16 Year-over-Year%
Change Q1'17 Q1'17 Q1'16
Year-over-Year% Change Life Sciences and
Applied Markets Group excluding NMR $ 540 $ 524 3 % $ (5 ) $ 545 $
524 4 % Diagnostics and Genomics Group excluding acquisition
163 158 3 % (1 ) 164 158 4 % Agilent CrossLab Group
excluding acquisition 361 344 5 % (5 ) 366 344 7 %
Agilent Revenue (Core) $ 1,064
$ 1,026 $ (11 ) $ 1,075 $ 1,026 5 % (a) We
compare the year-over-year change in revenue excluding the effect
of the NMR business, recent acquisitions and divestitures and
foreign currency rate fluctuations to assess the performance of our
underlying business. To determine the impact of currency
fluctuations, current period results for entities reporting in
currencies other than United States dollars are converted into
United States dollars at the actual exchange rate in effect during
the respective prior periods. The preliminary reconciliation
of GAAP revenue adjusted for the NMR business, recent acquisitions
and divestitures and impact of currency is estimated based on our
current information. Page 7
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version on businesswire.com: http://www.businesswire.com/news/home/20170214005815/en/
Agilent Technologies, Inc.EDITORIAL CONTACT:Victoria
Wadsworth-Hansen, +1-408-553-2005+45 29 33 69 80victoria.wadsworth-hansen@agilent.comorINVESTOR
CONTACT:Alicia Rodriguez,
+1-408-345-8948alicia_rodriguez@agilent.com
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